Sanofi readies a new drug supply firm in Europe

This is the web version of Brainstorm Health Daily, Fortune’s daily newsletter on the top health care news. To get it delivered daily to your in-box, sign up here.

Happy Monday, readers.

I spoke with Sanofi CEO Paul Hudson today about the company’s latest ambition—creating a massive new drug manufacturing company based in Europe. That may sound like a natural business decision for a French pharmaceutical giant, but it has a very specific implication as the coronavirus outbreak rages on in Asia and beyond.

China is one of the world’s largest manufacturers of active pharmaceutical ingredients (APIs)—the main chemicals at the heart of medicines used by millions across the world. The way the coronavirus outbreak has affected the country’s medical supply chains underscores why Sanofi wants to create an API manufacturing firm in France, according to Hudson.

“This recent challenge of coronavirus has brought it acutely into focus that Europe can’t wait longer to create this European powerhouse for manufacturing drugs,” he told Fortune.

This (as-of-yet-unnamed) new organization will aim to create active drug ingredients for hundreds of third party partners across a myriad of disease spaces, with a goal of going public by 2022.

“Some essential medicines are hard to get in the pharmacy in Europe,” said Hudson. “Why? Because over time, we pressured the price to be so low, it could only be made in China or India. And then if you come to a situation where China or India can’t make that supply, it’s patients in Europe who can’t get access.”

Hudson, a decades-long biopharma veteran, has only been in the top perch at Sanofi since September 2019. But he’s already made his mark with executive shakeups and a transformation of the company’s underlying business strategy. For more on our conversation and Sanofi’s goals with this new company, head over here.

Read on for the day’s news.

Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy

DIGITAL HEALTH

HHS proposes strategy for reducing government red tape for health tech. It may not be the most tantalizing of developments, but it's an important one: The Department of Health and Human Services (HHS) has released a new strategy memo for cutting down on the federal government's administrative bureaucracy that might make it harder to use health tech such as electronic health records (EHRs)—a medical technology with a plethora of problems, as readers know. The Centers for Medicare & Medicaid Services (CMS), which oversees massive government programs such as Medicare, Medicaid, and the Affordable Care Act, collaborated with the Office of the National Coordinator for Health Information Technology (ONC) to create the report, which was mandated by the 21 Century Cures Act signed into law by President Barack Obama in 2016. The main goals of the strategic document are to make the EHR data collection process faster for medical professionals, including by addressing regulatory reporting requirements that may slow down the process.

Juul to suspend sales in Indonesia indefinitely. Reuters reports that vaping giant Juul plans to shut down sales in Indonesia, one of the world's largest (and most unregulated) groups of users of tobacco and nicotine products. The beleaguered firm says that uncertainty about whether or not local Indonesian shops will enforce procedures to prevent sales to minors drove the decision. At the same time, New Zealand (another country the company has targeted for expansion amidst criticism in the U.S.) has decided to ban vaping ads and sales to minors; the combined effect is a big freeze in Juul's growth plans mere weeks after the firm raised $700 million in convertible debt to fuel its operations. (Reuters)

INDICATIONS

FDA approves Esperion's new cholesterol drug. The Food and Drug Administration (FDA) approved Esperion Therapeutics' cholesterol treatment Nexletol, sending the biotech's shares up 3% in Monday trading. The drug is part of a new class of cholesterol-busting medicines (not to mention Esperion's first approval in the U.S.), meant to be used on top of statins in patients who have especially high levels of "bad" LDL cholesterol. What's striking is Esperion's somewhat middle-of-the-road pricing strategy for the treatment; companies like Amgen and Sanofi/Regeneron's own newfangled cholesterol medications haven't rung in impressive sales given how expensive they are compared with statins, and Esperion is pricing its once-a-day treatment at $10 per pill.

Report: Coronavirus could lead to shortages of 150 drugs. Axios reports that FDA officials believe that the coronavirus outbreak could lead to a shortage of some 150 drugs. Much of this has to do with China's outsize role in manufacturing medications (particularly generic drugs) and the havoc the virus has wreaked on supply chains in the country.

THE BIG PICTURE

Fears grow as coronavirus spreads abroad while China cases fall. Here's the good news: Coronavirus cases inside of China finally appear to be falling. Now for the more concerning part: Outbreaks in Italy, Iran, South Korea, Japan, and several other nations have public health officials on high alert (and global markets in utter turmoil). The World Health Organization (WHO) has approached the growing number of cases with a mix of a call to vigilance, especially in countries with weak health systems, and a caution against panic.

White House set to ask for $1 billion in coronavirus funds. The Trump administration will ask Congress for $1 billion in funding to fight the coronavirus outbreak, according to Politico. But, if that figure is accurate, it would be a far cry from what some public health experts have said is the appropriate funding level for the testing, treatment, and R&D efforts to tackle coronavirus. (Politico)